On May 3, 2005, AT&T filed an emergency petition for "immediate
interim relief" with the Federal Communications Commission ("FCC"),
asking it to "level the playing field" in prepaid services no later
than May 17, 2005. In its petition, AT&T stated that the FCC's
February 23, 2005, decision ordering AT&T to pay $160 million in
Universal Service Fund ("USF") charges and subjecting the company to
intrastate access fees for its "enhanced" calling card services and
the FCC's concurrent issuance of a Notice of Proposed Rulemaking
("NPRM") on other enhanced prepaid services, skewed the regulatory
environment and "created uncertainty and asymmetries."

In order to create regulatory neutrality now, AT&T said that the FCC
should immediately adopt interim rules that all prepaid service
providers pay USF (Universal Service Fund) and interstate access
charges on all their services. This interim measure would apply to
"any form of prepaid calling services that allow users to pay in
advance for a specified amount of billing, whether by card, virtual
card, or PIN-based, serial number-based, or some other account
identification mechanism." AT&T wants this to apply regardless of the
technology that is used to provide service.

According to AT&T's petition, the FCC has authority to remove the
Enhanced Services Provider ("ESP") exemption for prepaid service
providers and direct that USF be paid on all prepaid card services,
regardless of whether they are ultimately determined to be information
services or telecommunications services. To make sure that all
prepaid service providers are subject to the same access charges, the
FCC could just simply remove the intrastate exemption and treat all
access charges as interstate, according to AT&T. AT&T says if the FCC
does not want to preempt state regulations, it could instead rule that
prepaid service providers will be subject to interstate or intrastate
access charges.

AT&T said that, as an alternative, the FCC could require that all
prepaid calling service providers pay intrastate access charges on all
calls within a state, and interstate access charges and USF on other
calls. If this alternative is adopted, AT&T said the interim rules
should include "stringent reporting and certification mechanisms."

According to AT&T's petition, there is the risk that if the FCC does
not institute AT&T's proposed measures immediately, in addition to
creating an unfair competitive environment, the Commission is risking
the collection of USF from prepaid service providers.

At this time, the FCC has not taken any action on AT&T's Petition.

FCC CIRCULATING ORDER TO REQUIRE VoIP PROVIDERS TO OFFER 911 SERVICES

Recent reports indicate that FCC Chairman Kevin Martin has proposed
requiring Internet-based telephone service provider ("VoIP") to offer
911 emergency services to customers by as early as the end of
September.

After a few incidents where customers failed to reach emergency
officials when they dialed 911, federal regulators are increasing
pressure on companies to ensure those calls get routed and answered
properly with location information.

The proposal would require VoIP providers to route 911 calls directly
to primary emergency lines within four months of the order being
issued.

Martin has circulated the proposal to his fellow Commissioners which
means it could be voted on as early as the FCC's May 19th open
meeting.

FCC UPHOLDS COMPETITIVE ACCESS TO ILEC DIRECTORY ASSISTANCE

On April 29, 2005, the FCC released an Order upholding and clarifying
its rules governing the duty of local exchange carriers to grant
competing carriers access to directory assistance information.

The FCC denied a petition filed by BellSouth and SBC seeking
reconsideration of rules that bar them from imposing restrictions on
the use by competitors of directory assistance information competitors
obtain from the LECs under the Communications Act. Section 251(b)(3)
of the Act requires that LECs provide nondiscriminatory access to
directory assistance, and the FCC has determined that this permits
competitors to have the same access to directory assistance
information that the LECs provide to themselves.

The order clarifies however, that a LEC must not provide access to
numbers that are unlisted at the customer's request. And while
competing directory assistance providers may be entitled to
nondiscriminatory access to directory assistance information, they
still must adhere to the privacy requests made by LEC customers.

Finally, the FCC rejected SBC and BellSouth's argument that LECs
should not be required to provide access to local listings that were
obtained from third parties. Even though the FCC has declined to
require LECs to provide nondiscriminatory access to nonlocal directory
assistance data, it has consistently required nondiscriminatory access
to all of their local directory assistance database listings.
_____

The Front Lines is a free publication of The Helein Law Group, LLP,
providing clients and interested parties with valuable information,
news, and updates regarding regulatory and legal developments
primarily impacting companies engaged in the competitive
telecommunications industry.

The Front Lines does not purport to offer legal advice nor does it
establish a lawyer-client relationship with the reader. If you have
questions about a particular article, general concerns, or wish to
seek legal counsel regarding a specific regulatory or legal matter
affecting your company, please contact our firm at 703-714-1313 or
visit our website: